Retirement investing checklist


In this article you will read about

  • Saving for retirement
  • Investing with a retirement target
  • Creating tax efficient retirement savings

Planning for retirement can be daunting. There are many factors that come into play and one may never clearly know the exact sum that is needed to see through retirement. It is imperative to plan for retirement by keeping a handy checklist that could guide you through the accumulation phase when investing towards retirement.

Estimating a budget in retirement: Start by adding up your monthly household expenses as a non retiree. Assume you may need to the same sum when you retire each month for a couple of decades of life in retirement. No factor inflation rate when you start saving towards building a retirement corpus. This is just s start, because as you start approaching retirement, you will get a better sense on your actual household expenses as you approach retirement.

Start retirement savings: Whatever your age or stage in life, you need to start investing towards retirement as early as possible. Once you decide the age when you plan to retire, all you need next is to determine how much you will need to save in order to live a comfortable lifestyle once you retire. The corpus that you need to save for retirement is something that you need to regularly re-evaluate till you actually retire to maintain your standard of living in retirement.

Debt free: Ensure that you are not left with any debt to service as you approach retirement. Getting out of debt early in life will make investing for retirement significant. Try to retire your debt at least a decade before you actually retire.

Keep adding: The only way to be ahead of how much you need in retirement is to keep saving more for it. Don’t get complacent with retirement savings and investments. Divert as much additional savings as you can towards retirement savings as you get older.

It’s never too late: Circumstantially, you may have started late to save for retirement. Make sure you are saving every rupee you can in order to make up for lost time. This may also mean that you could be working a few more years before your target retirement date, or reducing your retirement expenses keeping your situation in context.

Income streams in retirement: Chances are, you may have more than one retirement savings plan. For instance, you may be part of a mandatory employer-provided retirement savings and also have your own voluntary retirement savings. Analyse how these savings avenues will payout in retirement – pension, annuity or withdrawal from retirement corpus. You could use a regular stream for routine expenses, dip into reserves to manage unexpected expenses and also create a back-up for irregular expenses such as travel or annual expenses towards healthcare or house maintenance.

Tax efficiency in retirement: The last thing that you would want is to create a huge income tax liability for yourself in retirement. Understand how different savings, investments and income streets attract tax and how these could be modified towards greater efficiency.

The above is a broad checklist to get you to plan a comfortable retirement. However, to manage an efficient retirement, make sure to stay invested even in retirement to beat inflation. Regularly evaluate your retirement savings and how they are faring, because as you approach retirement, you may want to consider keeping the majority of your money in non-risky investments. Take the assistance of an advisor who can help you manage your money in retirement taking your risk taking ability into count.

Next steps

  1. Set a retirement target
  2. Select suitable retirement savings and investments
  3. Evaluate the progress of your retirement investments

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